Bill Barrett Corp. priced an upsized underwritten public offering of 13,500,000 shares of its common stock for total gross proceeds (before underwriters' compensation and estimated expenses) of approximately $99.9 million. The company intends to use the net proceeds from the offering for general corporate purposes, which may include development, deleveraging, or future acquisitions. The company has granted the underwriters in the common stock offering an option for 30 days to purchase up to an additional 2,025,000 shares of common stock to cover over-allotments, if any.
J.P. Morgan is serving as sole book runner for the common stock offering.
Wunderlich Securities commented on the announcement, noting that, while the funds will be added to Bill Barrett’s cash balance sheet for future opportunities, the company did not offer a specific use for the funds, which “makes the deal, at least currently, look like a dilutive transaction (20%-25%).”
Seaport Global Securities analysts agree that the equity issuance helps shore up Bill Barrett's balance sheet.
"We note liquidity stood at ~$448MM at 9/30, and we’ve pegged BBG’s FY17 outspend at a modest $13MM (predicated on a 1-rig program and $52 oil). Pro-forma for the transaction we now see YE17 net debt/EBITDA reduced to a more palatable 3.1x, down from 3.8x previously. While the associated dilution is notable (~26%) we view this move as a necessary step to help shore up BBG’s balance sheet ahead of an active FY17 drilling program."